MSCI Index: Federal Bank and 2 other stocks likely to see inflow of ₹6,370 Cr

Synopsis: According to a report by Axis Capital, some companies are on the verge of being included in or removed from the February MSCI India Index Review. Stocks like Aditya Birla Capital, Indian Bank, and Federal Bank may see inflows due to potential inclusion, while IRCTC, Astral, and Kalyan Jewellers could face outflows due to exclusion.

According to a report by Axis Capital, some companies are on the verge of being included in or removed in February MSCI India Index Review . A significant inflow or outflow of funds is expected upon the inclusion or removal of these companies, which could impact stocks.

The MSCI rejig refers to the quarterly process where Morgan Stanley Capital International (MSCI), a leading global index provider, reviews and rebalances its stock indices. During this update, MSCI may add or remove stocks and adjust the weightings of companies within the indices.

MSCI conducts comprehensive index reviews four times a year, in February, May, August, and November, with changes typically taking effect at the end of each review month.

These adjustments are driven by factors such as a company’s market capitalization, trading volumes, and the proportion of shares available for public trading (free float). This process ensures that the indices stay aligned with current market dynamics and continue to be relevant for global investors. 

For India, these changes have a direct impact on foreign investment flows and market sentiment, making MSCI rejig announcements closely monitored events in the financial markets.

Ahead of the February MSCI India Index Review, select stocks in the Indian market are seeing increased activity due to potential inclusion or exclusion from the index. Inclusion could trigger significant fund inflows, while exclusion could lead to outflows, causing short-term volatility in stock prices.

Stocks likely to be included

Aditya Birla Capital Limited

Aditya Birla Capital Limited (ABCL) is a leading financial services company in India, part of the Aditya Birla Group, one of the largest conglomerates in the country. ABCL offers a wide range of financial products and services across various sectors. This stock is likely to be included in the MSCI index may experience a potential inflow of approximately $170 million.

Indian Bank Limited

Indian Bank is one of India’s prominent public sector banks, providing a wide range of financial services to individuals, businesses, and institutions. As a key player in the Indian banking sector, the bank has a strong presence across the country.  This stock is likely to be included in the MSCI index could see a potential inflow of approximately $190 million.

Federal Bank Limited

Federal Bank is one of a leading private sector bank in India, offering a comprehensive suite of financial products and services to individuals, businesses, and institutions. Known for its robust customer base and strong market presence.This stock is likely to be included in the MSCI index could see a potential inflow of approximately $340 million.

On the other hand, stocks at risk of exclusion

IRCTC Limited

IRCTC (Indian Railway Catering and Tourism Corporation) is a leading public sector enterprise in India, primarily responsible for catering, tourism, and online ticketing services for Indian Railways. As one of the most prominent companies in the Indian travel and tourism sector, IRCTC has a significant market presence. However, this stock likely to experience an outflow from the MSCI index could see a reduction of approximately $109 million.

Astral Limited

Astral is a leading manufacturer of plumbing and building products in India, known for its high-quality pipes and fittings. The company has built a strong brand presence and reputation for innovation in the construction and infrastructure sectors. This stock is likely to be exluded in the MSCI index could see a potential outflow of approximately $120 million.

Kalyan Jewellers Limited

Kalyan Jewellers is one of India’s largest and most recognized jewelry retailers, offering a wide range of gold, diamond, and other precious jewelry. With a strong presence across India and in the Middle East, Kalyan Jewellers has established itself as a trusted brand in the jewelry sector. This stock likely to be excluded in the MSCI index could see a potential outflow of approximately $121 million.

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